Connected Planet, June 28, 2011 article
 Jun 28, 2011 12:09 PM The biggest small telco you’ve never heard of
“When the Bells were picking out metros, there were a handful that they missed,” said Royster Tucker III, chief operating officer for North State Communications, an ILEC that has been serving 150,000 people in the Piedmont triangle area of High Point, Winston-Salem and Greensboro, N.C. for about 100 years. The company was actually founded by Tucker’s great-grandfather.
But while many of the larger non-Bell telcos have been acquired by just a few of the nation’s largest carriers, North State has refused offers to sell. “Every now and then it comes up,” said Tucker in a recent interview. “But the board of directors is very satisfied with the direction we’re headed and that we offer a good level of value to shareholders.”
North State stock is available over the counter just as it has been since the company’s inception. Initially the company issued stock to raise capital to get the company going. Today, however, North State is a considerably more diverse company than it was when it started, offering video, data and wireless, as well as voice services—and operating as a CLEC outside its original turf.
Aggressive broadband plans
Like many other small telcos, North State has been aggressive in deploying broadband services. Almost everyone in the company’s ILEC territory can get DSL at speeds of 6 Mb/s or higher—and the company plans to bring fiber-to-the-home to at least 80% of that territory, including 60% of customers who should see availability this year.
Unlike most small telcos, however, North State is planning to achieve its build-out without Universal Service funding. Its population density is considerably greater than what typical Tier 2 or Tier 3 telcos experience, enabling it to identify a business case for deploying fiber on its own dime. In that respect, the company operates more like a mini Verizon or AT&T.
Also like those companies, North State is no stranger to competition. “Our area is highly competitive,” said Tucker. “We saw the lay of the land and we’re addressing it with an aggressive fiber build-out and full board digital TV products across the fiber with some very high-speed Internet products and services.”
Tucker avoided giving a direct answer to a question about its projected FTTH take rates. “We’ll split the market,” Tucker said. “It won’t be like the days of voice when we had high market share. We will split the business with competition.” He added, however, that the company has set a target take rate that it expects to be able to achieve.
North State hopes to differentiate its FTTH-based services with higher data rates, starting with a standard 30 Mb/s symmetrical service and supporting speeds as high as 80 Mb/s. In addition, the company’s video service will be a high-quality offering with high-definition channels and other advanced features, Tucker said.
“It’s a pure IP product; it’s different from traditional cable,” Tucker said.
Unique deal with AT&T on wireless
Another important differentiation point for North State is that it will be in a position to include a highly competitive wireless offering in its service bundles as a result of a unique deal with AT&T. “We have a part in owning and managing the network in our ILEC footprint,” Tucker said. Third-generation services are already fully deployed and the company will soon be moving into HSDPA and 4G services. North State also is able to offer hot AT&T wireless devices such as the iPad and iPhone as part of its deal with the carrier.
North State multi-play customers who choose wireless as part of the bundle receive a single bill for all bundled services and also obtain data roaming on the AT&T wireless network—a capability many small telcos would like to have but do not.
North State has had the unique arrangement with AT&T for 11 years, and that, Tucker said, “has enabled us to have significant share in the wireless business.”
The CLEC side
Like many Tier 2 and Tier 3 telcos, North State also operates as a CLEC in areas adjacent to its ILEC territory, where it targets business customers.
“We buy some unbundled network elements and we have edged out with a fiber build,” Tucker said. “We have a nice cross-section of enterprise and small and medium size companies.” The company offers services such as data, hosted voice, and email. Metro Ethernet is a popular offering.
“We’re also doing some backup and disaster recovery across the Internet or a private network,” Tucker said.
When asked about how North State differentiates its business offering, however, Tucker downplayed the technology side. Instead he points to the same thing that almost every other small telco points to when asked the same question. The company’s biggest differentiation point, he said, is the level of customer service it provides.
“We simplify things for the business,” Tucker said. “If they have an issue, they contact us and we’re real easy to do business with.”
North State’s biggest differentiation point is not technology related, Tucker said.
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